to list on toronto exchange

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Egyptian Mining Legislation Under Review

By Jon A. Nones
07 Feb 2007 at 04:00 AM EST

CAPE TOWN (ResourceInvestor.com) -- In January, Egypt signed a memorandum of understanding (MoU) aimed at restructuring the country’s ancient gold mining sector. Centamin Egypt Mining [AIM:CEY; ASX:CNT] could be first at the proverbial gate when the doors reopen.

The MoU was signed by Oil Minister Sameh Fahmy and the International Finance Corporation (IFC), the private arm of the World Bank group, to replace old mining laws that have deterred foreign investment. Egypt's antiquated mining laws are currently based on profit-sharing.




At Mining Indaba 2007, Centamin CEO Josef El-Raghy confirmed with Resource Investor the IFC is looking into changing mining laws to facilitate more “transparency.”

Although he said that the changes are not yet known, one such change could be the institution of a tax royalty system similar to other countries.

Centamin currently has a 50/50 profit-sharing agreement with the government after development costs. El-Raghy said it is possible this could be sweetened after the new changes are instituted. He estimated the revisions to take at least a year.

Centamin Egypt Ltd. has been exploring for gold in Egypt since 1995, and in 2005 was granted a 160 square kilometres exploitation lease over the massive Sukari Hill gold project. The agreement allows for 30 years of exploration with a 30-year option.

The company boasts 8.26 million ounces at a grading of 0.5 g/t and 6.17 million ounces at 1 g/t in accordance with JORC standards. Centamin estimates a 70% conversion rate to Measured & Indicated.

There are currently 10 drills on the site, with 9 working to expand resources. Discovery cost is low at about $4/oz, as energy costs come in around 0.14 cents per litre of diesel fuel.

The company moved to the development stage without a bankable feasibility study, but plans to secure project financing early this year. Producing is forecast to commence in Q3 of 2008 at a rate of 4 million tonnes per annum – 200,000 ounces per annum. A feasibility study to upgrade the project to a 4-5 million tonne per year operation is currently in progress.

El-Raghy said the company recently concluded its Environmental Impact Study and plans to submit it to the government this week. He said the company has had no environmental issues with the community.

“We see environmental approval forthcoming,” he said.

The company also acquired the $200-million Kori Kollar Plant in Bolivia from Newmont [NYSE:NEM] and is in the process of deconstructing and transporting it to Egypt, scheduled to arrive in July 2007.

Centamin's open-cut mine at Sukari in southern Egypt's Red Sea hills area is already one of the largest in Africa, and the country's first new gold mining operation of note in 2,000 years. Egypt has a long history of gold mining, dating as far back as 1,200 BC to ancient pharaonic mines in a desert that stretches from the Nile south of Luxor to the Red Sea.

Another junior Australian mining company, Gippsland Ltd. [AIM:GIP; ASX:GIP], is also drilling for tantalum, tin and gold in the Eastern desert. (See Resource Investor’s most recent coverage.)

Share Price Activity

Centamin shares are trading up 0.13 pence today at 36.13 pence on AIM. The company plans to list on the TSX in March of 2007.

The company has a market cap of $500 million with $30 million in cash and no debt.